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The coal market isn't getting any better, and it looks like access to capital markets is getting weaker by the day for Peabody and other indebted coal miners.

What: Shares of Peabody Energy(NYSE:BTU) have dropped more than 20% today following two major events in the coal space. The first was an announcement from CEO Glenn Kellow that it anticipates an even weaker coal market in the coming months than what we have today. The other was that fellow coal producer Arch Coal(NASDAQOTH:ACIIQ) terminated a debt-swap deal that could lead to Arch becoming the third major coal company to file for bankruptcy this year.

So what: You couldn't tell by the company's stock price today, but shares of Peabody Energy actually beat Wall Street estimates for EBITDA today after reporting $128 million in earnings before interest, taxes, depreciation, and amortization. Despite the better-than-expected operational result, management's comments about the future sent investors heading for the hills. Management stated that the combination of increased environmental regulations, cheap natural gas, and weak demand for metallurgical coal was likely to result in continued weakness for the coal market for the foreseeable future.

To make matters worse, the termination of Arch's debt-swap deal is a signal that heavily indebted coal producers may not be able to find effective ways to recapitalize. If that were true, Peabody may find itself in a similar situation when it needs to refinance its $6.3 billion in outstanding debt.

In response to these market conditions, Peabody also announced that it would be selling off non-core assets. When a company is in the financial stress Peabody finds itself in, that would normally make sense. But based on where prices of coal are today, it's hard to imagine that Peabody will be able to get a halfway decent price on these assets.

Now what: If the 89% decline in Peabody's shares wasn't enough of an incentive to get out of a position in Peabody, today's announcement might be a good time to reconsider. The company says that it sees improving times ahead, but some companies in the coal space are actually profitable and taking market share today. If Peabody's competitors can be profitable today and it can't, it's hard to see the company's prospects improving anytime soon.